Caledon dairy farmer can transfer his quota, tribunal rules

Wednesday, July 4, 2012

by SUSAN MANN

A decision enabling a Caledon-area dairy farmer to transfer his entire quota holding to his daughter isn’t likely to result in a flood of similar appeals, says an agricultural tribunal.

The Agriculture, Food and Rural Affairs Appeal Tribunal made that determination in its June 26 written decision and ordered that within 90 days of the ruling being finalized Alan Cunnington and his wife, Julie, can transfer their entire quota holding of 23 kilograms to their daughter, Leanne Cheesmond, who farms with her husband, Tomas, at the same location as her in-laws, Paul and Elaine Cheesmond.

Cunnington had appealed a Dairy Farmers of Ontario decision to refuse the transfer.

Cunnington says he didn’t want to comment on the decision until the 30-day appeals deadline has passed.

Bill Mitchell, Dairy Farmers’ assistant communications director, says Graham Lloyd, the organization’s general counsel and corporate secretary, wasn’t available until Friday. Mitchell says he couldn’t comment on whether Dairy Farmers will appeal the tribunal’s decision.

The tribunal’s decision states that Cunnington claimed the quota policy changes Dairy Farmers implemented in 2010 were confusing and not properly communicated and that’s why he missed the July 31, 2010 deadline to apply for the transfer. Cunnington thought he had until Jan. 1, 2012 to submit the proper paperwork.

If he had applied by the July 31, 2010 deadline, his quota transfer application would have been considered under the previous policy and would have been allowed.

Lloyd noted the policy being challenged by Cunnington was a legitimate change “and he argued that the crux of the case is really whether or not the notice was sufficient,” the decision states. Lloyd alleged Cunnington’s claim that he made an error in reading the April 28, 2010 letter because it was confusing isn’t reasonable and the rest of Ontario’s dairy farmers understood it.

But the tribunal says the Cunningtons weren’t alone in finding the notice confusing. More than 40 dairy farmers and 20 agribusinesses signed a petition saying they didn’t understand it.

“The tribunal finds that the lack of the actual policy wording in the notice of April 28, 2010 and the delay in providing this information most certainly caused additional confusion and uncertainty amongst producers,” the decision says.

Representatives from Dairy Farmers, George MacNaughton, production director, and David Murray, board vice-chair, told the tribunal family quota transfers have occurred since 1975 and before November 2006 transfers happened relatively frequently.

At the end of the chain of some transfers, there wasn’t actually a family relationship so the board decided to restrict family transfers with policy changes in 2006, the decision says.

In 2009, Dairy Farmers harmonized its quota policies with the four other Eastern Canadian provinces it shares revenue with from industrial and fluid milk markets. They are: Quebec, Nova Scotia, New Brunswick and Prince Edward Island. But shortly after the change was implemented, the board learned some producers were trying to circumvent the process by acquiring blocks of quota without going through the exchange.

Murray says the board’s objective is to ensure as much quota as possible goes through the exchange.

MacNaughton told the tribunal that since the quota price cap of $25,000 per kilogram was implemented in 2009, the amount of quota that farmers bid for is 50 times greater than the amount that’s available on the exchange. But before the price cap, the amount of quota farmers bid on was only double the amount available on the exchange. The most quota new farmers can buy in a year under the current system is three kilograms but what these farmers are looking at is how to buy larger blocks of quota.

The 2009 policy enabled farmers to transfer quota once a year if a parent wanted to help a child get started in the industry but that quickly became a mechanism for mergers.

The board was concerned that mergers would further dry up quota availability. But a new policy introduced by Dairy Farmers in 2010 shut down that option and also doesn’t allow quota rentals, the decision states.

The tribunal found that none of the prohibitions in the actual 2010 policy apply to the Cunningtons’ quota transfer request, so there isn’t a need to provide an exemption because the policy’s wording accommodates such transfers. In addition, the board’s desire to prevent non-family transfers doesn’t apply in this case, nor does the board’s concern that the quota would be transferred back to the parent.

The tribunal reasoned that allowing the appeal wouldn’t prompt a flood of similar appeals because there had been only one other similar transfer request that required a policy exemption. That request, from a father to a son, also failed to earn the board’s approval. The family filed, then withdrew an appeal, the decision says. BF